I keep thinking about the compliance officer who has to sign off on using a public chain for settlement. Not the engineer. Not the founder. The person whose name sits on the report.
Their question isn’t about throughput. It’s simpler: if something goes wrong, can we explain who saw what, when, and why?
In regulated finance, disclosure is structured. Data flows through permissions, reporting obligations, supervisory access. On most public chains, visibility is universal by default. That works when the system is experimental. It becomes uncomfortable when it’s payroll, remittances, or corporate treasury moving stablecoins at scale.
So we improvise. We build privacy layers on top. We rely on off-chain agreements. We assume regulators will accept technical complexity as good faith. In practice, that feels fragile. Exception-based privacy suggests that openness is the norm and discretion is a workaround. Regulators tend to distrust workarounds. Institutions avoid them because legal ambiguity is expensive.
The tension exists because settlement wants neutrality, while compliance wants controlled transparency. Both are reasonable.
Privacy by design simply acknowledges how regulated systems already operate: selective visibility, auditability, and predictable rules around access.
If infrastructure like @Plasma is going to be used, it will be by payment firms, stablecoin issuers, and banks that need predictable reporting without broadcasting strategy. It works if privacy reduces legal risk and operational cost. It fails if supervisors see it as concealment rather than structure.
@Plasma
